[solaxun]

I understand your concerns, but the alternative (at least in the U.S.) of credit agencies are absolutely abysmal. Despite the privacy concerns it's difficult for me to imagine more data not improving the current state.

For 10 years I had to fight one of the 3 major U.S. credit bureaus to get them to remove a bankruptcy that was showing on my report because a relative with the same name happened to have a bankruptcy in their past. Think about how incredibly stupid that is - I was 18 at the time, so according to this report I started a business at 12 and filed Chapter 11 at 16. I had a different social security number, address, and DOB that should have made things painfully obvious, yet still the burden of proof was on me to show why this report was false. Oh, and you can only challenge it by snail-mail (at least back then). If you don't get a response, there is no number to call, no address to visit, and practically speaking no way to challenge the agency short of hiring a lawyer.

Not to mention the obvious problem of credit bureas relying on length of history as a primary determinant of credit-worthiness. I don't like debt so I didn't get a credit card until 28, and did so then only because I knew I needed to build history if I ever wanted a house. If you are a responsible steward of your finances and choose to avoid debt in lieu of paying with savings, then that lack of history may preclude you from getting a loan in the future. You could have a $2mm net worth but that credit history will still be a problem with traditional lenders.

It's worse for immigrants - the U.S. credit agencies often don't interface with their home country's agencies. Imagine a responsible 60 year old adult with a pristine record in their homeland, viewed as a risky borrower by the bureas here due to lack of history. Another problem is not having a large enough number of credit accounts. I don't need more than one card, so I just use one card, but that's a negative on my report because the agencies wan't to see multiple "revolving accounts" (credit cards) holding a balance. You have to... wait for it... have more debt to show that you're good at managaging debt.

I could go on at length about how shitty the 3 main bureas are, and if this comes off as ranty it's because, if it's not obvious, I absolutely despise them and would love nothing more than to see them relegated to the graveyeard in short order.

[NikolaNovak]

Hmm, I'm 100% with you, but the end of it:

"You have to... wait for it... have more debt to show that you're good at managaging debt."

Suddenly made sense, despite being intended as sarcasm / surrealism. Everything else in life, I get better at by practicing. Debt may be similar; getting that first credit card, regardless of age, CAN be alluring temptation to max out. Some history of on-ramped, well managed debt, makes sense would be a prime proof that "one can manage debt" :-/

[pell]

> You have to... wait for it... have more debt to show that you're good at managaging debt.

It is quite a strange system to me from a non-American perspective. A US acquaintance of mine told me their parents signed them up for a credit card as a teen so they could “build credit” early on.

[emteycz]

Yeah it is so strange to all the young Europeans - until it slaps them in the face once they need a loan and must scramble to learn about it and have to suffer the consequences of having none of it because they thought it's some weird American thing.

The US way is extreme, but credit absolutely does exist here and works the same way - you'll get much better deals for insurance and loans if you have it, and it takes years of payments without issues to build it.

[jltsiren]

It depends on the country. Some countries subscribe to the idea that all credit is bad credit.

I grew up in a system where only negative credit history was shared between banks. If you had no credit history, you had perfect credit history. Your creditworthiness depended on having regular income and paying bills in time. Based on that information, banks determined an overall limit for all your loans and other forms of debt. If you had a credit card, you would get a smaller mortgage. Large credit limits relative to your income and spending signified risk rather than creditworthiness.

[emteycz]

Does it really work like that in practice, or are there """bonuses""" you can get if you prove your credit?

Here in Czechia, it's like you say, no history = perfect credit - but as I said, you'll get much better deals (after counting in bonuses) if you have proven your credibility - and the normal deal you get with only "perfect" credit is nearly a financial suicide. Building your credibility by having a credit card (and paying on time) is as good idea here as it is in the US because you don't pay interest until the next month so it's free.

The only difference is, in the US it's institutionalized (and thus transparent) whereas here I have to do under-the-table dealings with the bank's independent sales representative. Sucks, IMHO.

[jltsiren]

Creditworthiness is (was?) based on stable income and spending habits in Finland. Credit cards used to be niche products for foreign travel and later online purchases.

[emteycz]

Used to be niche here as well, but nowadays it's a useful tool, especially with the modern banking apps. It also has really cool and free year-long worldwide travel insurance, something that would cost me a lot of money otherwise. And I get discounts for using it to pay for hotels and car rentals and accumulate airline miles with every purchase.

Really, we in EU get all the good features with none of the bad things that the US people suffer from. I recommend to ask your bank about their available deals.

In the banking app, I was watching my credibility directly affect the loan offers available to me in real time. I got my interest rate down to half of the usual deal (which is based on my income and expenses) after a year of paying back on time. It really pays off.